Handle

DEFINITION of Handle

The handle has two meanings in trading. In most markets, it means the whole numbers involved in a price quote, without the decimals included.

WHAT IT IS IN ESSENCE

The handle and cup pattern are in connection.

The pattern is a continuation chart pattern that looks like a cup and handles with a defined resistance level at the top of the cup.

It forms from a strong drive up that pulled back and consolidated over a period of time creating the cup. Just before making another push to the resistance where it pulls back again but not as far creating the handle. And then makes its final push past the resistance level and continuing on the trend.

The pattern’s right-hand side will usually manifest in lower trading volumes. And will range anywhere from 7 to 65 weeks. Once, when this downtrend has run its course, the price of the security is expected to make a significant breakout through the resistance level of the previous highs.

This pattern develops as a security begins to test old highs. There it will develop selling pressure from investors who bought at these levels. This selling pressure leads to a steady downtrend in prices that can last anywhere from 4 days to 4 weeks before it begins to advance higher again.

HOW TO USE

The whole-dollar price of a bid or offer is referred to as the handle (e.g., if a security is quoted at 101.10 bid and 101.11 offered, 101 is the handle.

In this example, the market is then simply quoted as ‘ten to eleven’, as in ‘.10 to .11’.) 

In forex, this pattern refers to that part of the quote that appears in both numbers of the spread.

Both offer a faster way of referring to the price of an asset at a specific point in time.

If a stock is trading at $36.43, its handle is just $36. If a currency pair can be bought for 1.6456 and sold for 1.6400, then it is 1.64.